The UK Border Agency's IT system has collapsed under the volume of applications being made, forcing senior executives and foreign investors to consider taking their business elsewhere, a partner at one of Britain's top law firms said today.
Andrew Tingley, an immigration lawyer at Kingsley Napley, said it was "beyond farcical" that new rules requiring foreign nationals from outside the EU to have a biometric residents permit had left the IT system unable to cope.
"The system that was introduced was not fit for purpose," he said.
"It was close to collapse a few weeks ago. It has now collapsed. It's an absolute mess."
The row comes after Labour accused the Home Office of drifting "from one shambles to another" as it battles with concerns over queues of up to three hours at Heathrow airport in the run-up to this summer's Olympic Games.
Mr Tingley also claimed the delays at the border were being made worse by the time taken for the system to validate travellers' fingerprints and warned of the impact on the UK's economy.
"You have senior global managers and directors of companies saying, 'enough is enough'," he said.
"Employers are saying they can't access a reasonable immigration system and they're considering moving abroad.
"They've come to the point now where they're seriously considering not investing or working in the UK because they can't access any reasonably competent system."
He said most senior executives, investors, entrepreneurs and leaders of industry need their application for a biometric residents' permit to be decided on a same-day basis.
UKBA's solution of asking people to apply by post, which can take up to six months, "is not an answer", Mr Tingley said.
"For people who need to travel, they can't have their passport taken away for six months. They can't afford to be without their passport for that long."
He went on: "The issue the UKBA have at the moment is the IT system is not suitably robust for the volume of application they're dealing with."
UKBA staff were "literally at the end of their tethers", he added.
"One said they were not even offering a minimum service. The system cannot cope."
A UKBA spokeswoman said: "We are experiencing some IT problems in our Croydon Public Enquiry Office which we are working to resolve as soon as possible.
"In order to complete cases that have been affected, we will be reducing the number of daily appointments until May 18.
"We will prioritise completing all outstanding applications and those with cancelled appointments can rebook through the UK Border Agency website or can submit postal applications using our postal service."